Before the pandemic, Roku, Hulu, and YouTube made up about half (45.9%) of the US connected TV (CTV) ad market. Now, according to eMarketer, that market has expanded significantly. Despite solid US CTV ad revenue growth across all three companies, their combined share will account for around one-third of the US$26.92 billion that will go to CTV in 2023.
According to eMarketer, what has changed is that Netflix, Disney+, and HBO Max all introduced ads. Moreover, Amazon has become a much bigger CTV player, especially within sports and its Freevee service, and social video from places like TikTok are taking more CTV ad share as users watch this content on TV screens.
“Given just the scope of its business, Netflix could become one of the largest players in streaming advertising within a few years,” said eMarketer’s analyst Ross Benes. “Netflix will be slow out of the gate. The company missed initial viewership guarantees for its first class of advertisers, but its potential is immense,” he added.
Netflix accounts for about a quarter (23%) of all time spent with streaming video in the United States, according to Nielsen, and eMarketer expects Netflix to pass US$1 billion in US connected TV ad revenues in 2024, assuming it can successfully convert ad-free users into ad-supported ones.
Meanwhile, eMarketer noted that Disney+’s pivot to ad-supported video has a leg up on Netflix. “Streaming ads may be new to this service, but they are not new to the company,” Benes said. The Walt Disney Company has years of experience selling ads on its TV channels, as well as streaming ads on ESPN+ and Hulu. “That means its ad business can get off the ground running,” Benes added.
Hulu grew its ad-supported tier with promotions, bundles, and discounts. With Hulu and ESPN under its umbrella, Disney+ will be able to follow the exact same playbook. So even though Disney+ accounts for about 5% of time spent with streaming video, its ad business is primed and ready, while Netflix faces growing pains, the report assures.
At the same time, Peacock will hit US$1 billion in US connected TV ad revenues in 2024, putting it neck and neck with Netflix, despite the fact that it will have more than 100 million fewer US viewers. Peacock’s ad strengths are on the distribution side because it is already tethered to NBC and can be included in package deals with NBCUniversal’s inventory.
Looking downstream, eMarketer believes players like Hulu and YouTube face a shrinking share of CTV ad spend in the United States, not because they are getting weaker but because the market is getting stronger. Time spent with streaming is climbing, and ad dollars will follow as more streamers introduce ads.